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Hasbro Boosts Shareholder Value

Toy-maker Hasbro Inc. (HAS) recently announced the approval of an additional share repurchase program worth $500 million. The additional share repurchase authorization is a part of the company’s strategy to enhance shareholder returns. The program has no expiration date. As of Jul 31, 2013, Hasbro had approximately $71.8 million worth shares outstanding for further repurchase.

The share buyback program will help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.

The Pawtucket, R.I.-based company re-initiated its share repurchase program in Jun 2005. Since the renewal of the buyback program, Hasbro has repurchased 91.4 million shares for $2.8 billion.

Hasbro also has a dividend distribution policy in place. In Feb 2013, Hasbro raised its quarterly cash dividend by 11% to 40 cents per share with the release of its fourth-quarter 2013 results. This was preceded by a 20% hike each in Feb 2012 and 2011.

Hasbro’s cash position remains stable with cash and cash equivalents of $1.02 billion (up 30.9% year over year) while its long-term debt was $0.96 billion (down 31.5% year over year). This further reiterates the fact that the company has strong liquidity and the ability to raise shareholder value.

While Hasbro did not score well in its recently-concluded second-quarter 2013, missing the Zacks Consensus Estimates on both counts and posting lower numbers on a year-over-year basis, its efforts to step up long-term shareholder value is a ray of hope for investors.

However, Hasbro is not the only company driving shareholder returns. Last month, another sector behemoth Mattel Inc. (MAT) also announced an increment in the stock buyback program by $500 million.

Hasbro currently carries a Zacks Rank #3 (Hold). Some companies from the toy sector that are worth a look include Activision Blizzard Inc. (ATVI) and Take-Two Interactive Software Inc. (TTWO), both carrying a Zacks Rank #1 (Strong Buy)